Musa Auto Finance — a new auto lender in the industry specializing in used leases — claims its lending program lessens the learning curve for dealers, President Richard Frunzi told Auto Finance News.
Leasing is a more complicated transaction than the traditional loan, he said. From the calculation of the residual value to learning different terminology such as “cap-cost reduction” instead of “down payment,” dealers have a lot to study in order to implement leasing at their dealership.
And Musa believes its program will be attractive to low-credit borrowers looking to lower their monthly payment, secure a smaller down payment, and put more miles on the vehicle, Frunzi said.
Dealers who partner with the lender receive Musa’s contracting software for free and it integrates with RouteOne and Dealertrack systems, he said. The dealer submits information about the borrower through their system like they normally would, and when Musa approves the contract it also sends back the completed contract through its proprietary portal. F&I managers can then complete the deal knowing that the calculations for residual value and risk are correct in the lender’s eyes.
“Most people don’t know what a residual is or a money factor and how it converts to an interest rate,” Chief Executive Jeff Morgan told AFN. “Our goal is to get in and educate the dealers that need the training but also simplify through technology.”
The calculations and decisioning of the lease contract currently take about five minutes, and in the next 30 days the company hopes to implement an auto decisioning tool that will reduce the time to 30 seconds, Frunzi said.
The digital portal was one of the first things Morgan started on when forming the company because the biggest hurdle was integrating it with existing CRM systems already in use in dealerships across the country. Used leasing is such a small portion of the industry that many systems aren’t capable or optimized to form those contracts.
“It’s very much like when you go into the Apple store and lease an iPhone — it’s not rocket science, it’s fast and easy,” Frunzi said. “We want to make [leasing] that efficient.”
